The 10 Key Points Of The G20 Finance Ministers' Communique From Cairns

Treasurer Joe Hockey at the close of the G20 finance minister meeting in Cairns.

The G20 finance ministers ended their meeting in Cairns today with a focus on economic growth, the development of infrastructure, improving the safety of the global financial system and a coordinated effort against large multinationals avoiding tax.

Australian federal Treasurer Joe Hockey, the host of the meeting, says the G20 finance ministers are 90% of the way to meet their 2% economic growth goal, bringing with it millions of jobs, but there is more to do.

“We showed a unanimous resolve to improve on this effort,” he says.

“Countries will be working right up to the Summit (meeting in Brisbane in November), and beyond, to bring forward additional measures, including policies to boost employment, boost trade, and improve investment conditions.

“We are even more determined to press ahead with ambitious growth-enhancing structural reforms and actions to lift quality infrastructure.

“While the world economy is recovering, growth is uneven and there are some obvious risks to the outlook. I am optimistic about what we can achieve if we work collaboratively.

“It is critical that we take concrete steps to boost growth and create jobs. We will use all levers available, including additional fiscal and monetary policy leverage where appropriate.

“We want to create the environment for private sector-led growth, and provide our citizens with more jobs and better living standards.”

The next big G20 event is the leaders’ summit in Brisbane on November 15 and 16.

1. We welcome the stronger economic conditions in some key economies, although growth in the global economy is uneven and remains below the pace required to adequately generate much needed jobs. Downside risks persist, including in financial markets and from geopolitical tensions. The global economy still faces persistent weaknesses in demand, and supply side constraints hamper growth. We need strong, sustainable and balanced growth and robust financial sectors to safeguard our economies from these risks and put people into jobs. We are united and determined in our response to these challenges.

2. Chief amongst our response is our Sydney declaration to develop new measures that aim to lift our collective GDP by more than 2 per cent by 2018 above the trajectory implied by policies in place at the time of the St Petersburg Summit in 2013. Structural reforms will be important in this regard. We have developed a set of new concrete measures that will facilitate growth, increase and foster better quality investment, lift employment and participation, enhance trade and promote competition. Preliminary analysis by IMF(International Monetary Fund)-OECD (The Organisation for Economic Co-operation and Development) indicates these measures will lift our collective GDP by an additional 1.8 per cent through to 2018, including from important positive spillovers. These measures, along with macroeconomic policies, are designed to lift global growth and contribute to rebalancing global demand. Implementation of these measures is also essential to foster private sector growth, to give our citizens more opportunities to improve their living standards. In the lead up to the Brisbane Summit, we will continue to identify a series of additional measures to meet our collective growth ambition. We will hold each other to account in implementing these policy commitments.

3. Monetary policy in advanced economies continues to support the economic recovery, and should address, in a timely manner, deflationary pressures where needed, consistent with central banks’ mandates. We are looking to achieve broad-based and robust growth and this will facilitate the eventual normalisation of monetary policy in advanced economies. We will continue to clearly communicate our actions in a timely way and be mindful of impacts on the global economy as policy settings are recalibrated. We are mindful of the potential for a build-up of excessive risk in financial markets, particularly in an environment of low interest rates and low asset price volatility. We will monitor these risks and continue to strengthen macroeconomic, structural, and financial policy frameworks, and other complementary measures, as the best response to managing risks, and meet our G20 exchange rate commitments. We will also ensure the continued effectiveness of global safety nets.

4. We will continue to implement our fiscal strategies flexibly to take into account near-term economic conditions, so as to support economic growth and job creation, while putting debt as a share of GDP on a sustainable path. We agree to consider changes in the composition and quality of government expenditure and tax to enhance the contribution of our fiscal strategies to growth.

5. Investment is critical to boosting demand and lifting growth. Today we have agreed to a Global Infrastructure Initiative to increase quality investment, particularly in infrastructure. The Initiative will seek to implement the multi-year infrastructure agenda, including through developing a knowledge sharing platform, addressing data gaps and developing a consolidated database of infrastructure projects, connected to national databases, to help match potential investors with projects. The Initiative will also include key measures in our growth strategies to improve investment climates, which are central to our efforts to attract private sector participation. In implementing our growth strategies, we will seek to support quality public and private investment, including by optimising the use of the public balance sheet while maintaining appropriate risk controls. We encourage the World Bank Group and regional and national development banks to continue to optimise balance sheet utilisation. The implementation mechanism for the Initiative will be announced by our Leaders in November and will make best use of existing capabilities and institutions. To support the Initiative, we have agreed on a set of voluntary Leading Practices to promote and prioritise quality investment, particularly in infrastructure, and will develop effective approaches for their implementation, including through model documentation. This will complement our continuing work to facilitate long-term financing from institutional investors, including through implementation of the agreed G20/OECD principles, and voluntary use of new effective approaches and the related checklist. Furthermore, work is currently underway to improve the transparency and functioning of securitisation markets which will promote financing, including for SMEs. We welcome the work of the World Bank Group to develop the Global Infrastructure Facility which provides a platform for collaboration between development banks and the private sector to lift quality infrastructure investment in emerging markets and developing economies.

6. We have delivered key aspects of the core commitments we made in the wake of the financial crisis in 2008 to build a stronger and more resilient financial system which underpins growth in the global economy. Banks are now generally better capitalised and stronger liquidity arrangements are being put in place. For the Brisbane Summit, work is underway on a plan that will increase consistency in banks’ application of the strengthened Basel III rules on capital. We have identified global banks and insurers that are so large, complex and interconnected that their failure could cause significant economic and financial sector disruption, and potentially result in serious taxpayer losses. We have set stronger capital requirements for global systemically important banks. We welcome the substantial progress made to date in defining the terms and conditions of a proposal for addressing the too-big-to-fail issue through additional loss absorbing capacity that would further protect taxpayers if these banks fail. We welcome the FSB’s statement that it will be in a position to deliver a proposal in time for the Brisbane Summit. The proposal will be subject to public consultation and a quantitative impact assessment and further refinement before any final measure is agreed. By the Brisbane Summit, the FSB will deliver the remaining core elements of its shadow banking framework and will update the Roadmap agreed in 2013 to support continued monitoring and actions to address potential systemic risks in this area. Our reforms to the over the counter (OTC) derivatives market will reduce systemic risks and increase transparency. We call on regulatory authorities to make further concrete progress in implementing these OTC derivatives reforms as agreed. We encourage jurisdictions to defer to each other when it is justified, in line with the St Petersburg
Declaration.

7. Beyond 2014, it is important that we finalise remaining elements of the policy framework and fully implement agreed financial regulatory reforms, while remaining alert to new risks. We welcome the FSB’s plans, commencing in 2015, to prepare a consolidated annual report on the implementation of the reforms and their effects. We also welcome the FSB and international standard setting bodies’ plans to publish in 2015 information summarising their respective processes for policy development and implementation reviews. We look forward to the completion by the Brisbane Summit of the FSB’s review of the structure of its representation that responds to the increasingly important role of emerging markets in the global economy and the financial system, and ensures the FSB’s work is informed by the best expertise in national jurisdictions, while maintaining the FSB’s effectiveness.

8. We are strongly committed to a global response to cross-border tax avoidance and evasion so that the tax system supports growth-enhancing fiscal strategies and economic resilience. Today, we welcome the significant progress achieved towards the completion of our two-year G20/OECD Base Erosion and Profit Shifting (BEPS) Action Plan and commit to finalising all action items in 2015. We endorse the finalised global Common Reporting Standard for automatic exchange of tax information on a reciprocal basis which will provide a step-change in our ability to tackle and deter cross-border tax evasion. We will begin exchanging information automatically between each other and with other countries by 2017 or end-2018, subject to the completion of necessary legislative procedures. We call on all financial centres to make this commitment by the time of the Global Forum meeting in Berlin, to be reported at the Brisbane Summit, and support efforts to monitor global implementation of the new global standard. We support further coordination and collaboration by our tax authorities on their compliance activities on entities and individuals involved in cross-border tax arrangements. We welcome progress so far, and encourage further steps by G20 countries to deliver the St Petersburg commitment to lead by example in meeting the Financial Action Task Force standards on beneficial ownership. We will continue to take practical steps to assist developing countries preserve and grow their revenue bases and stand ready to help those that wish to participate in automatic information exchange. We are deepening developing country engagement in tackling BEPS issues and ensuring that their concerns are addressed.

9. IMF quota and governance reform remains a key priority for the G20 and we are committed to maintaining a strong and adequately resourced IMF. We continue to urge the US to ratify the reforms agreed to in 2010 by year-end and reaffirm our Leaders’ agreement in St Petersburg and our agreement in April 2014.

10. We are concerned about the human cost of the Ebola epidemic, and the potentially serious impacts on growth and stability in the affected countries and wider region and we underscore the importance of a coordinated international response.